Govt must balance domestic focus with promotion of FDI: Jetro chief

Setsuo Iuchi, the newly appointed president of the Japan External Trade Organisation (Jetro) Bangkok, yesterday said he expected to see the government adopt a pro-investment attitude, having already announced its clear intention to encourage domestic consumption.

 Iuchi, who was previously deputy director-general to the Economic and Industrial Policy Bureau of the Economic, Trade and Industry Ministry in Japan, said he was confident Japanese investors would benefit from the policy to stimulate domestic growth via major schemes to boost incomes. However, a good balance between domestic, export and investment promotion is essential in order to ensure stable economic growth, he stressed.

 Despite the global economic slowdown, Asia will grow through "self-support" and relying mainly on domestic demand and trade in the region, he said, adding that Japan - as part of Asia and a major investor in Thailand and other Asian countries - will continue its investment and grow in line with the region.

 "We will continue to invest overseas, in particular in Thailand and [elsewhere in] Asean. More and more Japanese businesses have consulted with Jetro in seeking investment opportunities in Thailand and other Asean members," said Iuchi.

 He said sectors such as automobiles, electronics, consumer-goods manufacturing, food processing, and small and medium-sized enterprises would like to invest more in the Kingdom.

 Japan is the largest FDI source in Thailand, accounting for more than 40 per cent of the overall value. The Board of Investment reported that Japanese enterprises applied for privileges totalling Bt97.33 billion for 312 projects with a combined investment of Bt205.19 billion during the first seven months of the year.

 To improve local FDI prospects yet further, Jetro has identified three key factors. The first of these, Iuchi said, was that Thailand must continue a pro-investment policy by setting up clear investment regulations and reducing barriers in order to stimulate more FDI.

 For instance, the government's plan to reduce corporate income tax is favourable. However, investors would also like to see an overall economic policy that ensures long-term investment, he said.

Second is to continue the connectivity policy with Asean in order to ensure that the Kingdom becomes a stronger regional investment hub, in particular among countries along the Mekong River. This can be done by developing the country's logistics system and production to facilitate trade and investment growth, the Jetro Bangkok chief said.

 Third is to develop productivity as well as training and focusing on human-resources development in order to ensure higher returns via a value-added-based economy.

 Despite already being considered a centre for foreign investment, he said Thailand still had room for further development, especially in human resources and technology.

 Asked about the planned increase in the daily minimum wage to Bt300, Iuchi said Japanese investors already normally paid workers higher than minimum wages. However, he would like to see the new government's wage-hike policy being deployed in line with capacity development.

 Iuchi added that while some Japanese investors might consider introducing more machinery to replace some of the workforce if the higher-wage policy were to be pursued, they would at the same time aim to maintain employment levels and be willing to help improve the development of skilled labour.

 He said he hoped that under the Japan-Thailand Economic Partnership Agreement, which was implemented almost three years ago, both sides would enhance cooperation to develop skilled labour that serves FDI and other investment, as Japanese investors now faced a shortage of skilled workers in the Kingdom.